Revamping Medicare: Emphasizing Innovation, Access & Insurance Reform

Medicare Drug Price Negotiations Expanded to Include Part B Medicines

John Stanford, the executive director at Incubate, recently discussed the decision by the Centers for Medicare and Medicaid Services (CMS) to include Part B medicines in Medicare drug price negotiations for the first time. This expansion, part of the third round of selected drugs under the Inflation Reduction Act (IRA), introduces new financial considerations for physicians and related stakeholders, as it extends beyond Part D retail prescriptions to encompass physician-administered therapies like infused drugs usually covered under Part B.

Reimbursement Changes and Drug Development Concerns

Stanford suggested that the shift towards negotiated prices could place financial pressure on physician practices, given the common use of Part B drugs in clinical settings where providers buy and receive reimbursement for medications under a bundled payment structure. However, he noted that the exact operational outcomes of this change are not yet certain.

Stanford voiced concerns about structural disincentives for the development of small-molecule drugs, often known as the “pill penalty.” Currently, these drugs become eligible for price negotiation sooner than biologics. He argued that several drugs in the latest selection round would not have qualified for negotiation if eligibility timelines were equal.

Impacts on Funding and Investment

Stanford cited a recent Incubate survey as evidence of these concerns’ potential impacts on the biopharmaceutical industry. The survey, conducted among the patient, corporate, and investment communities that Incubate represents, found that 80% of investors reported less interest in funding small-molecule development due to the policy framework. Stanford also suggested that this shift in investment interest could lead to broader implications for US competitiveness in biopharmaceutical innovation.

Pros and Cons of Medicare Price Negotiations

Advocates of Medicare price negotiations point to cost savings for beneficiaries and the federal government. Critics, however, worry that the policy might shape research and development priorities. The long-term effects of the policy on provider economics, drug development pipelines, and global competitiveness remain actively debated as policy implementation continues. Stanford went on to discuss potential policy adjustments that could balance cost containment goals with continued life sciences innovation and investor confidence.

Stanford on Policy Adjustments and Accessible Medicine

In an interview with PC, Stanford stated, “A drug that doesn’t make it to a patient is not a successful drug. We have to have conversations about affordability and accessibility…Even with price controls in place, patients still can’t necessarily access those specific medicines, and it’s because we fundamentally ignored reforming the insurance system.”

Stanford argued that while the government might save money through price controls, this does not necessarily translate to benefits for patients. He called for the elimination of out-of-pocket costs for certain medicines, like chemotherapy drugs, and criticized the current insurance system. Stanford concluded, “We want to see insurance act as insurance. Your doctor prescribes you a drug, it should be covered, full stop… We have over-complicated this system for no good reason, besides padding the vertically integrated insurer companies’ profits.”